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Health Insurance: Major Finance Mechanism

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Growth of Commercial Health Insurance. Provider-Organized Plans ... Ineligible people may use individual policies. Public Health Insurance. Tricare. Medicare ... – PowerPoint PPT presentation

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Title: Health Insurance: Major Finance Mechanism


1
Health Insurance Major Finance Mechanism
  • Chapter 6
  • Dr. Tracey Lynn Koehlmoos

2
Chapter Overview
  • Insurance Concepts
  • Evolution of Health Insurance
  • Private Health Insurance
  • Public Health Insurance
  • Pending Policy Reforms
  • This chapter will not cover managed care

3
General Concept
  • Insurance protects against infrequent, large loss
    by establishing contractual relations between the
    insured and the insurance provider and spreading
    the risk across a larger population.

4
General Risk Assessment
  • Underwriting Process-actuarial risk
  • Experience Rating
  • Cherry Picking/Cream Skimming
  • Adverse Selection
  • Redlining
  • Insurers goal
  • premium received gt benefit paid

5
Specific Health Concepts
  • Early days
  • Linked to Employment
  • Hospitalization Only (113 among non-elderly)
  • Conceptual Shift
  • Expanded scope of interactions
  • Non-random, non catastrophic events
  • Commercial v. social purpose

6
Risk Assessment
  • 35 of insuredno claims
  • 5 of insured majority of claims
  • Most insurers require medical screening
  • Pre-existing conditions
  • Excluded
  • HIPAA (1996)

7
Direct Risk Adjustment
  • Medical Underwriting
  • Tier ratingby member and industry
  • Durational ratingLow to start, increases over
    time
  • Redlining
  • Excludes individuals or groups based on perceived
    hazards, life-style or claims history

8
Indirect Risk Adjustment
  • Co-payments
  • Limited Benefits Packages (procedures/pharmaceutic
    als)
  • Caps/Ceilings
  • Waiting period for effectiveness
  • Results in inequitable access across the US

9
Growth of Commercial Health Insurance
  • Provider-Organized Plansdominant before WWII
  • Post-WWII Growing Non-for Profit Hospitals, more
    plans based on employment groups
  • 1947 Taft-Hartley Act Health benefits as a
    condition of employment for which labor was
    entitled to negotiate

10
Availability in Small Businesses
  • Smaller businesses lt100 employees
  • 50 of US labor firms
  • Nature of business too high risk
  • Unaffordable premiumscannot spread risk
  • Part-time work force
  • One claim could increase all premiums
  • 10 to 40 higher cost to small v. large business

11
Retiree Health Insurance
  • Larger companies offer this as a benefit
  • Hard to capture this group as data
  • Jeopardy of benefits due to shake-ups in the
    mid-1980s
  • Medicare eligibleMedicare 2nd payor
  • Employers seek higher cost share
  • Medicare Part D Patients Bill of Rights

12
Self-Funded Health Insurance
  • Large group of employees
  • Eliminates need for insurance company
  • ERISA exemptions
  • Pay only what is used
  • Can negotiate rates
  • Insurance companies can be hired to bear
    excessive financial risk
  • Third Party Administrator can handle admin.

13
The Cost of Doing Business
  • Health Insurance is a major expense
  • Premium growth rateson the rise, again
  • 4,692 per employee family per year
  • 2,088 per employee per year
  • 75 of business health expenditures are on health
    insurance premiums
  • 16 Medicare Contributions
  • 8 Workmans Compensation

14
Cost Containment Measures
  • Cost Sharing/Co-payments
  • Limiting Scope of Benefits
  • Caps on Insurance Expenditures
  • Controls on Utilization
  • Prior Authorization
  • Second opinions
  • Pre-certification (nursing home stay)

15
ERISA
  • Employee Retirement Income and Security Act of
    1974
  • Allows large employers to self-insurer
  • Response to concerns on pension mismanagement
  • Protects health services benefits packages

16
HIPAA
  • Established requirements for carriers at the
    individual, small and large group markets
  • Portability from group to individual plan
  • Limits pre-existing condition waiting periods
  • Also, state reforms in the early 1990s

17
HIPPA
  • Health Insurance Portability and Accountability
    Act of 1996
  • Allows employees to carry insurance to the next
    job without a waiting period
  • Allows employees in small companies to bring in
    previous insurance
  • Addresses confidentiality issues

18
Summary of Private Insurance
  • Covers 2/3 of US population
  • Mostly as employee benefit, large group
  • New laws and regulations to protect the benefits
    of the insured
  • Ineligible peoplemay use individual policies

19
Public Health Insurance
  • Tricare
  • Medicare
  • Medicaid
  • State insurance programs for the uninsurable
  • State Child Health Insurance Programs

20
Tricare
  • Military dependents and retirees
  • Supplemental to Military Health Service System
  • 8.4 million beneficiaries
  • Outside of the military system, Tricare functions
    as an HMO with contracts awarded to regional
    civilian companies.

21
Medicare
  • Social Security Act of 1965
  • Originally only for gt65 years of age
  • Currently 87 of beneficiaries
  • 1972 End Stage Renal Disease (ESRD)
  • 1973 Any age, Medicare disability
  • Currently 13 of beneficiaries

22
Do you know your ABCDs?
  • Part A Hospital Insurance (HI)
  • SNF, HH, Hospice
  • Deductible 840 per benefit period
  • Financed by Fed Trust Fund (payroll deduction,
    employer contributions)
  • Part B
  • Supplemental Medical Insurance (SMI)
  • Physicians, tests, outpatient services
  • Monthly premiums 75 by Fed Trust Fund

23
More Medicare ABCDs
  • Part C Medicare Choice, 1997
  • Managed Care with mixed results
  • Patients were slow to sign up
  • Providers found it costly
  • Part D Prescription drug plans
  • New and confusing
  • Threats to Medicaid/Medicare
  • Slow patient sign up

24
Medicaid
  • Social Security Act of 1965
  • State and Federal Program 50/50
  • No or Low co-pay or deductibles
  • State offerings vary
  • All include Inpatient, outpatient, x-ray, HH,
    preventive services for children, family planning
  • Some Podiatrist, Dentist, Physical therapy,
  • case management, eyeglasses

25
Medicaid Eligibility
  • Eligibility variesalmost all Low Income
  • Pregnant woman
  • Infants, children lt 6
  • Elderly, blind, disabled, poor Medicare
  • Special groups who qualify because of the disease
    (HIV/AIDS, NBCCEDP)

26
Who is on Medicaid?
27
Where does the money go?
28
Other State Run Programs
  • Medically Indigent Programs
  • State Sponsored Health Insurance Programs for the
    Uninsurable
  • State Childrens Health Insurance Program
    (SCHIPs)BBA 1997

29
Other types of insurance
  • Workers Compensation Insurance
  • Viatical Settlements
  • Health Ins Purchasing Cooperatives

30
Summary
  • 70 of US and almost all elderly have health
    insurance
  • Medicaid covers 10 of US population
  • 20 of US population NO insurance
  • Cost of premiums continue to rise
  • Employer sponsorship remains link
  • No basic set of benefits in the US
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